Social Security Tax Hike - Yingluck's Populist Fail

Some of you are receiving your first paychecks of the New Year. Yay!

You may notice your tax deductions have changed. A little. Most of you will pay 750 baht per month instead of 600 baht per month for social security fund starting this month. As a result of that, your withheld PIT tax might have dropped about 30 baht or so.

What happened? And what's the big deal?

Social Security Office recently sent a letter to all employers notifying them that social security tax has been raised from 4% to 5% for 2014. So, for most of us, our annual social security tax deduction increased from 7200 baht to 9000 baht (the maximum withholding). OK, so I pay an extra 150 baht to SSF every month, and I get to keep about 30 baht away from the grubby hands of the Thai Revenue Department.

For most of us, it doesn't really make any difference. But, what about Thai low income earners? How does it affect their take home pay?

I'm an employment law attorney and serve as HR for a company. I see the effect of this SSF tax increase.

Take a Thai worker who is earning 12,000 baht a month. Yes, it's low pay, but a good number of Thais manage to make end's meat on this paltry sum.

At 12,000 baht per month, their SSF contribution has risen from 480 per month to 600 baht per month. OUCH! And they don't pay PIT, so they don't get the benefit of seeing a drop in their PIT tax rate. It's a flat tax, not a progressive tax, and it hits people earning 15,000 baht or less per month hardest.

Back in 2012, Abhisit initiated a PIT tax reduction which reduced tax for many people. That recently became law, and gives Thai tax payers 2 years of tax relief. Do you see the problem? Yingluck's SSF tax increase took away everything Abhisit gave to low to moderate income tax earners. Under the new PIT tax table, anyone who earns about 20,000 baht or more per month, received a slight tax break for 2013 and 2014.

Yingluck, didn't your brother create SSF to help the poor? Of course, I doubt any Thais will figure out how she screwed over the very voter base that her brother cultivated. (well, aside from the rice pledging scandal).